$10B Walgreens private equity acquisition completed, new CEO named

Walgreens now has about 8,500 stores in the United States and Puerto Rico and 220,000 employees and associates, including 90,000 health care service providers, according to Sycamore.

In March, when Sycamore and Walgreens disclosed the deal agreement, analysts said the arrangement could provide up to $23.7 billion in deal value. Analysts are now saying that the deal appears to have an actual value of $10 billion.

The backdrop: The completion of the Sycamore-Walgreens deal comes as U.S. pharmacies are facing upheaval caused by forces including the COVID-19 pandemic, skyrocketing U.S. prescription drug prices, labor market shifts, import tax negotiations, competition from online retailers, and efforts by U.S. insurers, public health plans and employer health plan sponsors to cut what patients and their insurers pay for drugs.

Walgreens, which is based in Chicago, said in October 2024 that it would close about 1,200 of its retail stores over the next three years.

One of the Walgreens' stores biggest retail pharmacy competitors, Rite Aid, has been shutting down all of its stores.

Related: Rite Aid moves toward selling and shutting down 1,245 pharmacies

Health care researchers say the shrinking number of brick-and-mortar retail pharmacies is leading to a rapid increase in the number of pharmacy deserts, or places where patients must drive long distances to visit a brick-and-mortar pharmacy.

In April, Sen. Elizabeth Warren, D-Mass., sent Sycamore Partners a public letter asking the firm what it would do to avoid further decreasing Americans' access to brick-and-mortar retail pharmacies.

The brand: Walgreen drug stores are the places where many Americans took their sick children for their first cough syrup and where many of the children made their first retail purchases.

Stefan Kaluzny, managing director of Sycamore, acknowledged in a statement that Walgreens is "an outstanding brand that has been a cornerstone of American communities for nearly 125 years."

Stefano Pessina, who has been the CEO and largest single shareholder of Walgreens Boots Alliance, said he sees the Sycamore deal as a way to build a strong foundation for the company's future growth.

"Walgreens is an incredible brand, with loyal customers around the country," Pessina said. "I believe strongly in the business and its significant impact on the communities it serves."

What it means for health benefits: For employers and consumers, the Sycamore-Walgreens deal consummation and the Rite Aid store shutdowns are reminders of the limits of the ability of tough negotiations to hold down benefits costs.

Negotiations that are too gentle may let other players pad profit margins, but negotiations that are too tough may push some suppliers out of the market and help the survivors increase prices.